The Government Face Questions Over Youth Unemployment Figures

HIS Global Insight forecasts that youth unemployment, announced at 9.30 this morning, will top a million. Certainly the trend has been worrying. The Government will face fresh questions today about the adequacy of its response.

Factors far outside our Government's control are causing problems for the UK economy. But that was the case during the global financial crisis in 2008 and 2009. The Government at that time took action. The Coalition Government is failing to do so.

The central problem is the absence of growth. The incoming Government recognised that its policies would reduce public sector employment. But decisive action to cut the deficit would renew private sector confidence and unleash private sector investment and job creation. In June last year, the Prime Minister told the House of Commons that private sector growth would "more than make up" for public sector job losses and that unemployment would fall "every year of this Parliament".

That struck many as implausible at the time. It is now clear it was incorrect. Between March and June public sector employment fell 110,000, the largest fall since records began. Private sector employment increased by 41,000.

The Prime Minister's assertion drew on projections from the Office for Budget Responsibility (OBR). As the Chartered Institute of Personnel and Development has pointed out this week, "the Government has at times made crude political use of the OBR forecasts to buttress its particular economic policy narrative and thus close off alternative viewpoints ... heavier than expected public sector job losses when private sector job creation appears to be stalling raises questions about the wisdom of public sector job cuts at the present time".

Youth unemployment is especially worrying. When experienced over an extended period, unemployment at the start of someone's working life reduces their future potential, and the potential of the economy as a whole.

In 2009, recognising the dangers, the previous Government introduced the Future Jobs Fund. Every long-term unemployed young person was guaranteed a job at the National Minimum Wage, or a training place. The new Government scrapped it as soon as it was elected.

Unsurprisingly, youth unemployment rose. Evidence emerging now shows the Fund was highly effective - and cost effective too. We have argued for a return to this approach, with a programme to provide 100,000 jobs for young people.

Anecdotal reports suggest post-16 participation in education fell last month when the new academic year began. Education Maintenance Allowances have been scrapped. The prospect of £9000 per year higher education fees strikes many as unaffordable - leading them to question the value of studying for A-levels at all. Deterring participation in education is the very worst response to a youth unemployment crisis, yet that is what the Coalition Government has done.

The Government's new welfare to work scheme, the Work Programme, appears under-powered, and not up to the task. So we await today's figures with trepidation. And the case for a change of course on economic policy grows stronger by the day.